Housing Bubble Fears Appear Unfounded

Housing Bubble Fears Appear Unfounded

A Canada Mortgage and Housing Corporation (CMHC) report shows national housing activity slowing in 2011. However, prices are not predicted to collapse as many homebuyers have feared.

Overall, housing starts in Canada will slow to rates more in line with long-term trends. Sales activity - driven by the pent up demand that pushed home sales in Canada to record levels in 2009 - will also normalize.

Activity will vary by markets and housing type. Attractive mortgage rates and an inflow of migrants to Vancouver are expected to sustain housing activity in the region. The province of Manitoba is predicted to experience a rise in resale housing in 2011, after a disappointing three years of declining sales.

Condos are expected to make up the greatest share of new housing starts in Montreal, with the province of Quebecexperiencing market activity in line with the national average, according to the CMHC report.

Overall, home prices in Canada are expected to increase only slightly in 2011 as the relationship between demand and supply shifts. View a copy of the CMHC news release and report.